Waynesville leaders choose property tax hike over budget cuts

Saddled by a higher cost of doing business and hits to its bottom line, Waynesville aldermen were poised to pass a three-cent property tax increase this week, the town’s first in over a decade.

Nonetheless, the town’s total budget for the coming year will still shrink slightly — dropping from $30 million to $29.7 million.

A final vote by the town board was scheduled for Tuesday evening (June 24), but the writing was on the wall after a nearly three-hour budget workshop last week.

“Everybody wants to know about the three-cent property tax increase. I think we have effectively answered that question here tonight,” Mayor Gavin Brown said at the conclusion of the budget workshop.

Town aldermen looked for a way around the property tax increase but came up empty-handed. They couldn’t find anything in the budget they were willing to sacrifice.

It reaffirmed what Town Manager Marcy Onieal told town leaders earlier this month: a property tax increase was the lesser of evils.

“We are the town of Waynesville and we have always done the right thing,” Brown said.

By that, Brown apparently meant the town wouldn’t compromise its level of services or quality-of-life amenities in order to dodge a property tax increase, even if it is politically difficult to stomach. All four aldermen plus the mayor’s seat are up for election next year.

As aldermen pored over the budget, Onieal addressed the unspoken question of whether town employees could do without a 1 percent cost-of-living raise again this year, plus an additional 1 to 2 percent raise for high performers and career advancement.

Over the past five years, employees have seen a six percent raise, but that hasn’t kept pace with the real-world cost-of-living increase and inflation of 12 percent.

“I don’t want to suggest that we are not appreciative of everything you all have done for us,” Onieal said. “We are all grateful to have jobs. We are in far better shape than a number of people who have been drastically affected by the economy.”

In light of a huge jump in health insurance costs for employees, the town considered modest cuts in benefits but recognized the generous health coverage was a valued incentive for town employees.

Town leaders questioned whether they could tap savings to a greater degree, but the budget already calls for dipping into the town’s reserves to the tune of $1 million, and any more would be harmful, according to Finance Director Eddie Caldwell, who hopes to stave off the full hit to the fund balance as it is by penny pinching over the coming year.

Mayor Brown asked Caldwell if he was being overly cautious in the budget projections.

“Mr. Caldwell always budgets conservatively on the revenue side and quite high on the expense side,” Brown said.

The mayor asked whether the outlook might be more rosy than Caldwell was letting on, although at the same time, Brown commended Caldwell for his approach.

Caldwell was unwilling to hedge his financial outlook for the town, however. A conservative budget — one that accounts for slightly more in expenses and slightly less in revenue while hoping otherwise — offers a cushion against the unexpected.

“That is your only contingency,” Onieal said.

Towns and cities statewide are facing similar challenges: 202 municipalities have raised property taxes in the past three years. The town of Franklin is enacting a two-cent property tax increase this year. Bryson City increased property taxes by two cents last year.

Waynesville’s tax rate isn’t exactly off the charts when compared to like-size towns, but it will be among the highest town property tax rate in the seven western counties.

“They aren’t trying to do the things we are trying to do. We are progressive and trying to do things,” Brown said of the comparison.

Going up while coming down

While Waynesville’s property taxes will go up from 40 to 43 cents this year — bringing in an extra $330,000 — the town’s overall budget is smaller.

Raising property taxes won’t fully offset a litany of losses to various revenue streams: lower sales tax collections, county budget cuts for trash hauling, the loss of liquor store profits, dwindling annual interest on investments, pending elimination of business license fees and reductions in telephone franchise charges — just to name a few. While some seem obscure, cuts in the fees and funds add up to nearly $1 million in annual revenue lost over a five-year period.

On top of the tax hike, the town is dipping into its reserves by more than $1 million, but the town’s overall budget will still be lower than last year.